CNBC's Meg Tirrell Breaks Down The AbbVie/Express Scripts Deal

Express Scripts, the largest pharmacy benefit management organization in the United States, announced on Monday that it has exclusively selected AbbVie Inc's (NYSE: ABBV) new drug over Gilead Sciences, Inc.'s (NASDAQ: GILD) Hepatitis C drug. Following the announcement, the stock of Gilead slumped heavily.

CNBC's Meg Tirrell elaborated on this news and provided her perspective on how this will impact the overall biotech industry.

The Hep C Drug War

“We are seeing shares of Gilead take a big tumble today [Monday, December 22] as it faces major pricing competition from newcomer AbbVie in Hepatitis C,” Tirrell said.

“Express Scripts, the U.S.’s largest pharmacy benefits manager today, said it will exclusively cover AbbVie’s regimen on its largest plan for the most common form of the virus and will drop coverage from drugs of Gilead and Johnson & Johnson. This after Gilead’s Sovaldi, which was approved in December 2013 drew more than $8 billion in revenue in the first three quarters of this year and sparked a major debate over drug prices.”

Hep C Drugs Aren't Cheap

She continued, “It’s [Sovaldi] priced at $84,000 for a 12-week course of treatment, or $1000 a day. AbbVie’s regimen was approved by the FDA on Friday [December 19] and the company said, it would cost about $83,000, not a significant discount to Gilead’s Sovaldi or its combo regimen Harvoni at about $94,000.”

“But what we are told, Express Scripts negotiated a significant discount to that price as part of the agreement with AbbVie. And the news has weighed on the entire biotech industry as concerns mount that price across other therapeutic areas could come under the same pressure.”